AGR Ruling: RailTel Corporation moves Supreme Court

Mumbai: RailTel Corporation has moved the Supreme Court, seeking a modification or a clarification that its October 24 order on adjusted gross revenue pertains only to access service provider licence holders such as telcos, and not to all licence holders for internet service and national long distance telephone service. “It is submitted that the applicant is an internet service provider and national long-distance service provider where the definition of adjusted gross revenue (AGR) is different and does not include the words 'any other miscellaneous revenue' which is otherwise defined in clause 19 of the license agreement of access service,” RailTel said in its petition. ET has seen a copy of the petition.

The public-sector unit said it seemed that appeals of internet service providers (ISPs) and national long-distance (NLD) service licence holders have been “inadvertently clubbed with” appeals dealing with access service licence in which the court passed judgment on October 24. It urged the court that the company “be brought out from the purview of the judgment” as it does not hold telecom service licence. RailTel - a telecom infrastructure provider associated with the Indian Railways - holds ISP and NLD licences.

The company confirmed it has filed a modification/clarification request in the apex court. “DoT (telecom department) has asked for approximately Rs 290 crore in its various notices as licences fee on AGR,” it said in an email response to ET. “RailTel has submitted comprehensive representation to DoT clarifying our stand that the judgement of Hon’ble Supreme Court should not have any impact on RailTel.”

This is the first filed by a PSU after DoT started sending notices demanding a total of more than Rs 3 lakh crore in licence fees from non-telecom companies such as Gail India, Power Grid Corp of India Ltd, (PGCIL) and Oil India, based on the Supreme Court’s October 24 order. This despite these PSUs not being a party to the case.

Telecom companies such as Vodafone Idea and Bharti Airtel face over Rs 1.47 lakh crore in dues, stemming from the same order, which widened the definition of AGR to include non-core items. The dues need to be paid by January 23, the SC order had said.

RailTel said payment of the statuary dues will have an adverse impact in its upcoming projects. “RailTel had been awarded project-based contracts either through competitive bidding and/or on nomination basis,” it said. “All these projects will become unviable because the (AGR) charges were not built in estimates and it will result in busting of the estimated costs, thereby impacting profits severely.” The company pointed out that its licence income was Rs 571.43 crore in 2018-19, while its non-licensed income amounted to Rs 445.87 crore. The non-licensed revenue generated are beyond the terms of the telecom department’s licence agreements, and as such, should not be considered for computation of license fees, RailTel said.

“This is especially troubling for Rail-Tel, which has plans to go public,” a senior industry executive said. “While other PSUs may want to battle it out with telecom department, for RailTel, an immediate relief is needed.” According to reports, the government is looking to divest 25% stake in RailTel through an initial public offer. ET had reported that the non-telecom PSUs were taking legal opinion on how to jointly approach the Supreme Court for relief.

So far, Bharti Airtel and Vodafone Idea have moved the Supreme Court to seek a limited review of the petition. While Airtel has to pay over Rs 35,500 crore, Vodafone Idea has to put in over `53,000 crore. Both telcos have issued warning bells that without sufficient government relief, they may go kaput.